Stocks Finish at Session Highs

Good news on retail sales, manufacturing, and construction cheered investors. Tuesday brings an update on auto sales and a few earnings reports

Stocks finished at session highs Monday on the heels of strong post-Thanksgiving retail sales and better-than-expected economic reports.

The Dow Jones industrial average finished up 116.59 points, or 1.19%, to 9,899.05. The broader Standard & Poor's 500 index added 11.92 points, or 1.13%, to 1,070.12. The tech-heavy Nasdaq rose 29.56 points, or 1.51%, to 1,989.82.

The world's biggest retailer, Wal-Mart Stores (WMT ), provided some cheer as it reported a 6.3% rise in sales at its U.S. stores to a record $1.52 billion on the Friday after Thanksgiving. The Dow average rallied despite headlines of turmoil at the executive level of two component companies.

Following the recent ouster of the company's CFO, the chief executive of aerospace giant Boeing (BA ), Phil Condit, resigned Monday. Harry Stonecipher, who retired last year, will replace Condit, effective immediately.

Walt Disney (DIS ) said it was forcing director Roy Disney into mandatory retirement. He was the last Disney family member on the board and a sharp critic of chairman and CEO Michael Eisner. Disney agreed to leave but called for Eisner to step down as well.

Another Dow component, chemicals maker DuPont (DD ) announced plans to cut costs by $900 million by 2005. The reductions will come in part through job cuts. It also aims to raise revenue by 6%.

The latest data on the economy helped keep investor sentiment positive. October construction expenditures rose 0.9%, better than the expected 0.7% rise. The increase marks the fifth straight month of growth.

The Institute for Supply Management index, a key measure of manufacturing activity, showed a rise to 62.8 in November, up from 57 in October. The rise was stronger than expected and marks a fifth consecutive month of gains.

The ISM reading was the highest since December, 1983. All five components contributed to the rise, including employment, writes Maury Harris, economist at UBS in a report Monday. The latest ISM reading is typically associated with a 7.3% rate of growth in real GDP, Harris writes.

"Overall, while many Street analysts see only downside risk for fourth quarter growth to between 3.5% and 4%, from the whopping 8.2% surge in the third quarter, recent data suggest to us the downside is much more limited," says economic research unit MMS International.

The market on Tuesday will be on watch for motor vehicle sales data, says MMS. November domestic light vehicle sales are expected to rebound to 13.4 million units, which represents an 8% gain from the disappointing 12.5 million unit rate seen in October.

Among companies due to report earnings Tuesday are retailer Chico's FAS (CHS ), Navistar International (NAV ) and Sports Authority (TSA ).

Treasury Market

Treasuries returned from their holiday break lethargic and over-stuffed, and were unable to digest another helping of robust U.S. data, says MMS, noting that supply is also adding to the market's woes.

With Friday's November employment report the market's focal point, Treasuries are on defensive footing, with a sell-the-rumor, buy-the-fact trade setting the tone for the week, says MMS. Most economists see strong payrolls data for the month.

World Markets

European stock markets finished higher Monday as investors weighed the impact of a strong euro against the lifting of U.S. tariffs on steel.

London's Financial Times-Stock Exchange 100 index added 67.40 points, or 1.55%, to 4,410.00. In Paris, the CAC 40 gained 65.47 points, or 1.91%, to 3,490.26. Germany's DAX index added 75.25 points, or 2.01%, trading at 3,821.20.

Asian stock markets soared Monday. Japan's Nikkei 225 index rose 302.70 points, or 3.00%, to 10,403.27 after investors reversed their reaction to a possible bailout of Ashikaga Bank.

In Hong Kong, the Hang Seng index gained 139.52 points, or 1.13%, to finish at 12,456.99.

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